Health Net 2010 Annual Report Download - page 124

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
• (A) our failure or the failure of any of our subsidiaries to pay indebtedness for money we borrowed or
any of our subsidiaries borrowed in an aggregate principal amount of at least $50,000,000, at the later
of final maturity and the expiration of any related applicable grace period and such defaulted payment
shall not have been made, waived or extended within 30 days after notice or (B) acceleration of the
maturity of indebtedness for money we borrowed or any of our subsidiaries borrowed in an aggregate
principal amount of at least $50,000,000, if that acceleration results from a default under the instrument
giving rise to or securing such indebtedness for money borrowed and such indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled within 30 days after notice;
or
• events in bankruptcy, insolvency or reorganization of our Company.
Our Senior Notes payable balances were $398.7 million and $398.5 million as of December 31, 2010 and
2009, respectively.
Revolving Credit Facility
We have a $900 million five-year revolving credit facility with Bank of America, N.A. as Administrative
Agent, Swingline Lender, and L/C Issuer, and the other lenders party thereto. As of December 31, 2010, there
were no amounts outstanding under our revolving credit facility and the maximum amount available for
borrowing under the revolving credit facility was $650.9 million (see “—Letters of Credit” below).
Amounts outstanding under our revolving credit facility will bear interest, at our option, at (a) the base rate,
which is a rate per annum equal to the greater of (i) the federal funds rate plus one-half of one percent and
(ii) Bank of America’s prime rate (as such term is defined in the facility), (b) a competitive bid rate solicited
from the syndicate of banks, or (c) the British Bankers Association LIBOR rate (as such term is defined in the
facility), plus an applicable margin, which is initially 70 basis points per annum and is subject to adjustment
according to our credit ratings, as specified in the facility.
Our revolving credit facility includes, among other customary terms and conditions, limitations (subject to
specified exclusions) on our and our subsidiaries’ ability to incur debt; create liens; engage in certain mergers,
consolidations and acquisitions; sell or transfer assets; enter into agreements which restrict the ability to pay
dividends or make or repay loans or advances; make investments, loans, and advances; engage in transactions
with affiliates; and make dividends. In addition, we are required to maintain a specified consolidated leverage
ratio and consolidated fixed charge coverage ratio throughout the term of the revolving credit facility.
Our revolving credit facility contains customary events of default, including nonpayment of principal or
other amounts when due; breach of covenants; inaccuracy of representations and warranties; cross-default and/or
cross-acceleration to other indebtedness of the Company or our subsidiaries in excess of $50 million; certain
ERISA-related events; noncompliance by us or any of our subsidiaries with any material term or provision of the
HMO Regulations or Insurance Regulations (as each such term is defined in the facility); certain voluntary and
involuntary bankruptcy events; inability to pay debts; undischarged, uninsured judgments greater than $50
million against us and/or our subsidiaries; actual or asserted invalidity of any loan document; and a change of
control. If an event of default occurs and is continuing under the revolving credit facility, the lenders thereunder
may, among other things, terminate their obligations under the facility and require us to repay all amounts owed
thereunder.
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